Serafini v. Blake

• Decision Date: 05 March 1985
• Citation: 167 Cal.App.3d Supp. 11,213 Cal.Rptr. 207
• Court: California Superior Court
• Parties: 167 Cal.App.3d Supp. 11, 9 Soc.Sec.Rep.Ser. 922, Medicare & Medicaid Guide P 34,806 Fulvio SERAFINI, Plaintiff and Respondent, v. Ruth BLAKE, Defendant and Appellant. Civ. A. 16407. Appellate Department, Superior Court, Los Angeles County, California

Page 207

213 Cal.Rptr. 207

167 Cal.App.3d Supp. 11, 9 Soc.Sec.Rep.Ser. 922,

Medicare & Medicaid Guide P 34,806

Fulvio SERAFINI, Plaintiff and Respondent, v. Ruth BLAKE, Defendant and Appellant.

Civ. A. 16407.

Appellate Department, Superior Court, Los Angeles County, California.

March 5, 1985.

[167 Cal.App.3d Supp. 12] Peter R. Navarro, Los Angeles, for defendant and appellant.

Herb Wiener, Encino, for plaintiff and respondent.

SHABO, Judge.

We are asked to decide on this appeal whether a doctor, who has submitted a claim for payment to Medi-Cal, can thereafter seek to enforce an agreement by a member of his patient's family to pay for his services pursuant to an independent agreement between the family member and the doctor to render medical service to the patient. After studying the applicable federal and California statutes as well as the administrative regulations relating to the Medi-Cal program, we conclude that the agreement is not enforceable.

SUMMARY OF THE FACTS

The case was tried upon a stipulation of facts.

Hazel Coburn, 89 years of age, fell and broke her right hip on July 3, 1981. Her daughter, the defendant herein, took her to the emergency room at Burbank Community Hospital. Plaintiff, an orthopedic surgeon, was called to examine Mrs. Coburn. He diagnosed her injury as a subcapital fracture of the right femur and opined that she required immediate surgery. Plaintiff examined the Burbank Hospital records which indicated that Mrs. Coburn was entitled to Medicare benefits but had no other medical insurance.

Plaintiff's wife, and office manager, Maria Serafini, at approximately 8:30 a.m. on July 4, 1981, telephoned defendant, Mrs. Blake, at her home, to discuss payment of plaintiff's fees. During this conversation Mrs. Serafini advised defendant that the doctor did not accept Medicare assignments and that the practice of his office was to prepay the surgery, the fee for which was set at $2,800, plus a $100 consultation fee for the emergency room visit. The total fee was $2,900.

According to Mrs. Serafini, defendant "understood" the arrangement but could not prepay the surgery. Instead, defendant requested that plaintiff accept a $1,250 deposit while waiting for the Medicare payment. Mrs. Serafini testified that "it was the usual and customary practice of the office to have payment in full," and that, once paid, plaintiff would bill Medicare on behalf of the patient who then would receive the Medicare payment directly. The payment arrangement with defendant was discussed with plaintiff, who approved it and authorized a $400 patient discount because he believed Medicare would not pay his full fee. According to Mrs. Serafini, on this same morning the agreement was "confirmed" with defendant by telephone.

Dr. Serafini performed the surgery upon Mrs. Coburn on July 4, 1981.

On July 10, 1981, defendant personally brought into plaintiff's office a check for $1,250, which amount was credited on Mrs. Coburn's statement. The check was drawn upon Hazel Coburn's account at Gibraltar Savings and Loan Association. Defendant "reaffirmed" the phone conversation of July 4, and stated that she personally would pay the balance owed plaintiff.

On July 15, 1981, a request for Medicare payment was sent to Medicare, which paid to Mrs. Coburn the sum of $1,357.44.

On August 14, 1981, defendant went to plaintiff's office and presented a Medi-Cal label. She had explained that the Burbank Community Hospital had told her to do so as Medi-Cal might pay some of the fees in connection with the medical services rendered to Mrs. Coburn. Ms. Marcos, who was responsible for plaintiff's billing, advised defendant that the hospital "is separate and apart from the doctor's payment." Defendant replied that she would be in to pay the balance.

Mrs. Serafini also explained that "as a courtesy and favor" to Mrs. Coburn and to assist defendant in her attempt to have Medi-Cal pay the balance, the plaintiff's office did bill Medi-Cal. Medi-Cal in turn rejected the claim on the basis that it could not be processed due to "illegibility" or "incorrect format."

Mrs. Serafini denied that she did the billing for plaintiff and claimed unfamiliarity with the Medi-Cal claim forms or the operations of its program. She stated that Ms. Marcos was more knowledgeable about Medi-Cal. Mrs. Serafini denied reviewing Medi-Cal provider bulletins, but acknowledged that plaintiff had received them periodically--a fact also confirmed by Ms. Marcos.

Ms. Marcos, who had worked for plaintiff for nine or ten years, had taken Medi-Cal labels for Medi-Cal patients whom plaintiff had treated in the past, and subsequently billed the program for services rendered to them. She acknowledged receiving the Medi-Cal denial correspondence for Mrs. Coburn's claim but did not make any efforts to interpret the denial code. Without offering any explanation, she acknowledged that she had not contacted Medi-Cal for instructions on resubmitting Mrs. Coburn's claim nor made any efforts to determine the reason for its denial.

On November 17, 1982, the attorney for defendant, Peter Navarro, wrote to plaintiff's attorney, Herbert Wiener, and enclosed an American Express money order made payable to Dr. Serafini in the sum of $107.44 on the account of Mrs. Coburn. The accompanying letter explained that the enclosed check reflected the difference between what Medicare was to have paid Dr. Serafini and the amount paid by Mrs. Coburn. In the letter Mr. Navarro also explained that had plaintiff's office properly billed Medi-Cal, it would have paid the remaining 20 percent.

Mr. Wiener, plaintiff's lawyer, in a reply letter acknowledged acceptance of the American Express money order in the sum of $107.44 but indicated that the acceptance was not to be deemed or construed to be in agreement with the content of Mr. Navarro's letter.

Defendant, by stipulation, denied that she ever made a direct promise to pay for Mrs. Coburn's medical expenses. At trial she contended that the plaintiff's acceptance of Mrs. Coburn's Medi-Cal label extinguished any legal duty by defendant or her mother, Mrs. Coburn, to pay the medical bills. Further, defendant's lawyer argued that enforcement of any alleged oral contract would be barred by the statute of frauds because the alleged promise was not reduced to writing.

The trial court rendered judgment for plaintiff. This appeal followed.

CONTENTIONS ON APPEAL

Defendant argues that the judgment must be reversed because the Medi-Cal law expressly prohibits a provider from seeking payment for covered services from the beneficiary or the other person once the provider has obtained a Medi-Cal label, that plaintiff's remedies in seeking payment were exclusively limited to those delineated in the Medi-Cal statutes and the implementing regulations, and that appellant was under no legal duty to pay Mrs. Coburn's medical bills, in any event, because of the failure of the parties to comply with the statute of frauds. Because we agree with defendant's first two contentions and conclude that the agreement is unenforceable, we do not discuss her last contention.

DISCUSSION

1. Because enforcement of the agreement to pay for medical services covered by Medi-Cal would violate public policy, the agreement is unenforceable.

Section 1396a of 42 United States Code requires "[a] state plan, in order to qualify for federal funding, to provide such methods of administration ... as are found by the Secretary [of Health and Human Services] to be necessary for the proper and efficient operation of the plan...." One of the methods of administration found necessary and proper is contained in section 447 15 of 42 Code of Federal Regulations (1982) which provides: "A state plan must provide that the Medicaid Agency must limit participation in the Medicaid Program to providers who accept, as payment in full, the amounts paid by the agency...." (Emphasis added.)

Complying with this regulation, California adopted sections 14019.3 and 14019.4, subdivision (a) of the Welfare and Institutions Code. Section 14019.3 provides in relevant part that "payment received from the state in accordance with Medi-Cal fee structures shall constitute payment in full." Section 14019.4, subdivision (a), of the Welfare and Institutions Code, further declares: "Any provider of health care services who obtains a label or copy from the Medi-Cal Card or other proof of eligibility pursuant to this chapter shall not seek reimbursement nor attempt to obtain payment for the cost of such covered health care services from the eligible applicant or recipient, or any person other than the department or third party payer who provides a contractual or legal entitlement to health care services." In order to effectuate the foregoing statutory provisions, title 22, California Administrative Code, section 51002, subdivision (a) similarly states: "A provider of service under the Medi-Cal program shall not submit claims to or demand or otherwise collect reimbursement from a Medi-Cal beneficiary, or from other persons on behalf of the beneficiary, for any service included in the Medi-Cal program's scope of benefits in addition to a claim submitted to the Medi-Cal program for that service, except to:

"(1) Collect payments due under a contractual or legal entitlement pursuant to section 14000(b) of the Welfare and Institutions Code.

"(2) Bill a long-term patient for the amount of his liability.

"(3) Collect co-payment pursuant to Welfare and Institutions Code section 14134."

Likewise, section 51471, subdivision (a) of title 22, California Administrative Code, declares: "(a) No provider shall submit a claim to, or demand or otherwise collect reimbursement from, a Medi-Cal beneficiary or from other person on behalf of the beneficiary for any services included in the Medi-Cal program's scope of benefits in addition to a claim submitted to the Medi-Cal program for that service except to:

"(1) Collect payments due...